The new owner of the social media platform has stated that they dislike advertising, which is a significant issue as it accounts for 90% of the company’s revenue.
Elon Musk’s actions on Twitter have caused concern among advertisers who rely on the platform for revenue. In the weeks following his acquisition of the company, Musk made comments on the site that were perceived as offensive or promoting conspiracy theories.
He also introduced a new system that allowed anyone to pay for a verified blue checkmark, leading to confusion and chaos on the platform. As a result, several major advertisers have paused their ad spending on Twitter, leading to a decline in revenue for the company
Musk tweeted a link to a right-wing conspiracy theory about Paul Pelosi and posted a photograph of a Wehrmacht soldier with a joke about the progression of messaging technology. He also encouraged independent voters to vote Republican and threatened to subject advertisers who were boycotting the site due to activist groups’ agitation to a “thermonuclear name and shame” if they did not change their course.
While these events were occurring, Musk also quickly implemented changes to Twitter’s blue-check verification system. Previously, a blue check indicated that the identity of a notable figure had been verified.
The new system allowed anyone, including brand new accounts, to obtain a blue check by paying $8 per month and subscribing to Twitter Blue. This caused confusion and chaos on the site, with users creating fake accounts and posting false or satirical statements, such as a George W. Bush account joking about being nostalgic for killing Iraqis and a fake Eli Lilly account claiming insulin would be free. A fake Pepsi account also stated that Coke was better
Many of the tweets mentioned, while clever in nature as satire or agitprop, caused turmoil and confusion for corporate brand managers. This, combined with Musk’s own tweets, led to concerns about the safety of brands on the platform.
As a result, two major advertising agencies, IPG and Omnicom, recommended that their clients pause ad spending on the site, and companies such as Audi, General Mills, and General Motors had already done so. Currently, the majority of ads on Twitter are for niche or unusual products such as “magical” ice scrapers or “dragon’s eggs.”
It is clear that the turmoil caused by Musk’s actions on Twitter is detrimental to the company’s success, as advertising accounts for approximately 90% of its revenue.
While Musk’s long-term plan is to transition to subscription-based revenue, in the short term he still relies on advertising dollars. Despite this, he has engaged in behavior that could be perceived as reckless. Why might this be the case?
There is evidence to suggest that Musk’s management skills may not be well-suited for running Twitter. It is not just about having experience, but rather that certain executives are more effective at handling specific types of challenges and running certain types of businesses.
When faced with situations that do not match their strengths, they may struggle to succeed
Although it is not certain that Twitter will go bankrupt, the company’s CEO, Elon Musk, has been known to alienate users and advertisers with his actions and statements on the platform. Despite this, Twitter still has a significant number of active users who tend to be more educated and have higher incomes than users on other social media sites.
In order to improve the platform’s success and sustainability in the long term, it would be advisable for Musk to hire a seasoned social media manager with strong connections to advertisers to lead the company, rather than attempting to develop new management techniques himself.